Woolworths insists new chief executive can reinvigorate chain

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Woolworths' chairman, Richard North, maintained that its retail division can robustly grow its profits yesterday as the group parted company with its chief executive, Trevor Bish Jones.

The revelation about the departure of Mr Bish Jones, who is leaving after six and a half years, came as Woolworths posted a 1.9 per cent fall in total group sales for the 19 weeks to 14 June.

Mr North said: "I absolutely believe we can make improvements to Woolworths retail. I believe that we can reinvigorate Woolworths and get it performing better."

Woolworths' retail division delivered an adjusted profit of £3.4m in the year to January 2008, compared with a loss of £12.9m the year before.

Shore Capital's John Stevenson said: "We expect the retail division to remain loss-making for the foreseeable future, before property disposals."

The Woolworths chairman praised Mr Bish Jones' work on resurrecting its wholesale entertainment subsidiary, Entertainment UK, after the loss of the Tesco contract last year.

He also singled out Mr Bish Jones' role in helping Woolworths to unveil a refinancing package, with new four-year loan facilities totalling £385m in January. At the time, the retailer said the debt facilities would support the growth of the entertainment wholesales businesses, Entertainment UK and the DVD publisher 2 entertain, its joint venture with the BBC.

Mr North declined to comment on speculation that Woolworths may sell its 40 per cent stake in 2 entertain, thought to be worth up to £200m.

Mr Bish-Jones will stay in place for the next three months while Woolworths searches for a new chief executive.

Mr North said: "I discussed with him that making a change now would be good for the business, and it's fair to say that Trevor felt it would be good for him. The timing was to convenience the company, not to convenience Trevor."

Shore Capital's Mr Stevenson said management may have taken the view that a "fresh pair of eyes" was needed to deliver a different strategy.

Of Mr Bish-Jones' legacy, Mr Stevenson said: "Systems and processes have been improved. The business has become more efficient, and it has achieved substantial cost savings. Woolworths is a more efficient machine than it was seven years ago."

However, he added that its retail business had found it tough to compete against non-food specialists, the big grocers and online retailers.

For the 19 weeks to 14 June, Woolworths retail posted like-for-like sales down 2.2 per cent. Mr North said this partly reflected the fact that it was active promoting sales of higher-ticket electrical items for the same period last year.

Woolworths said it had agreed to dispose of leases on four stores in London to the grocer Waitrose for £25.5m.